Vol. 5 No. 2 Fall 1997
A Newsletter About New Jersey's Water Quality Programs

	New Financing Program to Improve Drinking Water Systems in New Jersey

A new funding program for improving public drinking water systems is currently being developed by DEP’s Water Supply Element and the Division of Water Quality, in conjunction with the NJ Wastewater Treatment Trust (soon to be known as the NJ Environmental Infrastructure Trust). The program, which is a Drinking Water State Revolving Fund (DWSRF) based on the Federal Safe Drinking Water Act Amendments of 1996 (the Act), will assist public water system owners in financing infrastructure improvements needed to maintain or achieve compliance with the requirements of the Act. Eligible "public water systems" under the Act include publicly-owned, privately-owned, and nonprofit, noncommunity systems. In order to provide the needed federal funds for this new initiative, Congress appropriated $1.275 billion in the fall of 1996, of which $28 million is allotted to New Jersey for the federal FY97 program.

The structure of the DWSRF program will be similar to the structure of the state’s Wastewater Treatment Financing Program, which already includes New Jersey’s SRF program for wastewater systems and other water quality improvement projects under the federal Clean Water Act. Through the Wastewater Treatment Financing Program, the DEP and the Trust provide low interest loans to local government units such as municipalities and sewerage/municipal utilities authorities for planning, design and construction. This successful program has awarded over $1.3 billion to projects since 1987.

On June 23, 1997, the Legislature passed amendments to the 1985 New Jersey Wastewater Treatment Trust Act, which would rename the Trust "the New Jersey Environmental Infrastructure Trust" which would be authorized to finance not only wastewater, combined sewer and stormwater management projects, but also water supply systems. In addition, the legislation allows the Trust to provide financing to both publicly and privately-owned drinking water systems. (Note: As of the date of this writing, these bills are pending action by Governor Whitman.)

In addition to the amendments to the Trust Act, the Legislature also passed amendments to the 1981 Water Supply Bond Act and the 1989 Stormwater Management and Combined Sewer Overflow Abatement Bond Act. These amendments, which require voter approval, will be on this November’s ballot. The amendments would allow a portion of the already approved bond act funds to be made available to the Trust. By awarding DEP loans using the federal funds, together with loans from the Trust from bond proceeds, the State will be able to provide low interest loans to far more projects than was previously possible.

It should be noted that the 1981 Bond Act authorized financing only to publicly-owned systems, and the amendments would not change this. If voters approve these amendments in November, the State will have the moneys needed to meet the federal capitalization grant funds’ 20 percent match requirement - a condition under both the Clean Water and the Drinking Water SRF programs. As a result, while no new dollars are involved in these referenda, the DEP and the Trust will be able to use these funds as a match for federal funds under the DWSRF. The state’s DWSRF will then provide low interest financing to both publicly and privately-owned drinking water systems. It is anticipated that the DWSRF program could close on loans in escrow as early as September 1998, in tandem with the existing Wastewater Treatment Financing Program schedule.

To involve the public in the State’s DWSRF program, the DEP, in May, mailed a preliminary Project Priority System to all community water systems, county and local health authorities, selected environmental groups, and selected engineering concerns, with a request for projects to be included in the initial DWSRF Project Priority List. Stakeholder meetings were held to solicit comments from various interested parties at the NJ American Water Co. in Delran on June 18, at the Passaic Valley Water Commission in Little Falls on June 24, and several other locations. The call for projects for the initial funding cycle (as early as November 1998 loans) closes August 29, 1997, while the call for projects for future funding cycles will be continuous.

The Project Priority System and the Project Priority List are two components of the overall Drinking Water SRF program. Also under development is the Intended Use Plan, which will describe New Jersey’s planned use of its allotment of federal monies authorized by the Safe Drinking Water Act Amendments.

DEP is planning to make the Priority System, Intended Use Plan, and Project Priority List proposal document available for public comment and will conduct a public hearing in December, 1997. In addition, DEP and the Trust will propose and adopt rules to govern the DWSRF program, which will also be subject to public participation.

For further information contact Philip Royer, Section Chief, Bureau of Safe Drinking Water, at (609) 292-5550.